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Reconsidering Investments: Stocks Spring Cleaning

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As green shoots emerge this Spring, investors are contemplating a financial cleansing akin to getting rid of clutter from the garage. When it comes to those convoluted portfolios, it’s time to declutter.

With that in mind, let’s delve into three stocks that are in the crosshairs of a panel of Motley Fool contributors, ready to bid them adieu this season.

Hand holding an iPhone with wood behind it.

Image source: Getty Images.

The Apple of Discord: Is AI the Forbidden Fruit?

Jake Lerch (Apple): Apple, the darling of the tech world, has been no stranger to success. Yet, the whisperings of stagnation are growing louder. The iPhone, Apple’s golden goose, seems to have lost its luster. Sales figures, once on a rocketship trajectory, now appear flatlined. In a curious case of déjà vu, Apple sold virtually the same number of iPhones in 2023 as it did in 2015. Furthermore, the revenue generated from iPhones has taken a dip from $205 billion in 2022 to $200.5 billion in 2023.

Year iPhone Unit Sales iPhone Revenue
2015 231.2 million $155 billion
2023 231.3 million $200.5 billion

The rise of Apple’s services segment is a silver lining, now contributing almost a fifth of the company’s revenue. But, software, historically not its strong suit, poses a riddle for Apple. An age-old resistance to unbundling its software from hardware could impede its growth, dating back to the ’80s when it balked at licensing the Mac operating system to other manufacturers.

The looming question: Can Apple hold its ground against tech titans like Microsoft, Alphabet, Meta Platforms, and Amazon, who have stamped their authority in software, social media, and web apps? The AI uprising adds another layer of uncertainty. Will consumers still view smartphones as a premium if every gadget from TVs to thermostats flaunts AI capabilities?

Apple finds itself at a critical juncture. While a bet against the Cupertino giant seems ill-advised, there are alluring alternatives with fewer shadows — consider Microsoft, Nvidia, and Amazon. And that is why Apple graces my list of vernal stock purges.

AI in Name Alone: Saving Grace or Doom for C3.ai?

Will Healy (C3.ai): C3.ai, with its promise of ushering in the AI revolution, beckons investors like a siren song. Collaborations with heavyweights like the U.S. Army and Baker Hughes hint at a rosy future. Yet, scratching beneath the surface reveals cracks in the facade.

Peeling the AI onion, it becomes apparent that C3.ai’s identity crisis is no abstract concept. Formerly known as C3 Energy and C3 IoT, its revolving door of titles raises doubts about its commitment to the AI cause.

Diving into its financials, a bleak narrative unfolds. Despite a 15% revenue uptick in the first nine months of fiscal 2024, operating expenses outweigh the gains. With a net loss of $207 million over this period, C3.ai’s profitability prospects seem murky.

Projections for fiscal 2024 offer little solace. Revenue forecasts between $306 million and $310 million indicate a modest 15% growth at best, failing to inspire confidence among investors.

The stock’s rollercoaster ride saw a meteoric rise followed by a precipitous fall last year. Currently up a modest 10% in the past year, it’s a far cry from its former glory.

Investors Beware: Financial Struggles for C3.ai and Super Micro Computer’s Soaring Stock

Investors Beware: Financial Struggles for C3.ai and Super Micro Computer’s Soaring Stock

When it comes to artificial intelligence (AI) investing, C3.ai may not be the shining star investors hoped for. Despite the technological promise it offers, the company’s financial performance leaves much to be desired. With share prices lagging behind the S&P 500, questions arise about the stock’s potential.

Is C3.ai’s Price Justified?

Trading at a price-to-sales ratio of 11, C3.ai’s valuation raises eyebrows. The steep multiple, coupled with its financial struggles, paints a picture of an expensive stock in troubled waters. For investors seeking AI opportunities, this may not be the ideal choice.

Consider Alternatives

Investors have a plethora of AI investment options at their disposal. Given C3.ai’s financial predicament, perhaps it’s time for investors to explore other avenues. Selling off C3.ai and redirecting investments towards a more promising AI player could potentially lead to better returns.

Super Micro Computer: A Cautionary Tale

Super Micro Computer, on the other hand, presents a different challenge. While the company has captured investors’ attention with its exponential growth, its stock has soared to dizzying heights. Rising over 1,000% from its 52-week low, caution flags may be warranted.

If you’re holding a massive stake in Super Micro Computer, it might be wise to consider trimming your position. While the company’s prospects seem bright, the rapid surge in stock price could signal potential turbulence ahead.

Amidst a scorching market fueled by the Nasdaq Composite’s 38% surge in the past year, a prudent investor knows when to secure profits. Super Micro Computer’s stratospheric rise exemplifies the fervor that has gripped the market, underscoring the need for caution.

It’s not about abandoning ship entirely; rather, it’s about acknowledging the power of greed in investment decisions. Holding onto massive gains may feel euphoric, but a savvy investor understands the importance of locking in profits when the moment calls for it.

Investment Insights

Still considering your next investment move? Ponder on this: Apple, a tech giant, might not be the top choice according to some analysts. The Motley Fool Stock Advisor team has earmarked ten stocks with immense potential, excluding Apple from the list. These select stocks promise substantial returns in the foreseeable future.

The Stock Advisor service provides investors with invaluable guidance, offering a roadmap to success in the tumultuous world of stocks. With returns surpassing the S&P 500 by threefold since 2002, it’s a resource worth exploring for investors seeking a competitive edge.

Before making any hasty investment decisions, it’s crucial to weigh your options carefully. Remember, the best opportunities often lie where others least expect.

Disclaimer: The views expressed are those of the author and do not necessarily reflect those of Nasdaq, Inc.

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